investor presentation - Capitol Acquisition Corp. III

TM
INVESTOR
PRESENTATION
APRIL 1, 2015
1
DISCLAIMER
THIS PRESENTATION HAS BEEN PREPARED FOR USE BY CAPITOL ACQUISITION CORP. II (“CAPITOL”) AND LINDBLAD EXPEDITIONS, INC. (“LINDBLAD”) IN
CONNECTION WITH THEIR PROPOSED BUSINESS COMBINATION. SUCH PRESENTATION MAY BE PRESENTED TO CERTAIN OF CAPITOL’S STOCKHOLDERS,
AS WELL AS OTHER PERSONS WHO MIGHT BE INTERESTED IN PURCHASING CAPITOL’S SECURITIES, IN CONNECTION WITH THE BUSINESS COMBINATION.
CAPITOL HAS FILED A PRELIMINARY PROXY STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH ITS SOLICITATION OF
PROXIES FOR THE SPECIAL MEETING OF CAPITOL STOCKHOLDERS TO BE HELD TO APPROVE THE TRANSACTION (THE “SPECIAL MEETING”).
STOCKHOLDERS OF CAPITOL AND OTHER INTERESTED PERSONS ARE ADVISED TO READ CAPITOL’S PRELIMINARY PROXY STATEMENT AND, WHEN AVAILABLE,
DEFINITIVE PROXY STATEMENT IN CONNECTION WITH CAPITOL’S SOLICITATION OF PROXIES FOR THE SPECIAL MEETING BECAUSE THESE DOCUMENTS
WILL CONTAIN IMPORTANT INFORMATION. SUCH PERSONS CAN ALSO READ CAPITOL’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2014, FOR A DESCRIPTION OF THE SECURITY HOLDINGS OF THE CAPITOL OFFICERS AND DIRECTORS AND THEIR RESPECTIVE INTERESTS
AS SECURITY HOLDERS IN THE SUCCESSFUL CONSUMMATION OF THE TRANSACTION. THE DEFINITIVE PROXY STATEMENT WILL BE MAILED TO CAPITOL’S
STOCKHOLDERS AS OF A RECORD DATE TO BE ESTABLISHED FOR VOTING ON THE TRANSACTION. STOCKHOLDERS WILL ALSO BE ABLE TO OBTAIN A COPY
OF SUCH DOCUMENTS, WITHOUT CHARGE, BY DIRECTING A REQUEST TO CAPITOL ACQUISITION CORP. II, 509 7th STREET, N.W., WASHINGTON, D.C. 20004.
THESE DOCUMENTS, ONCE AVAILABLE, AND CAPITOL’S ANNUAL REPORT ON FORM 10-K CAN ALSO BE OBTAINED, WITHOUT CHARGE, AT THE SECURITIES
AND EXCHANGE COMMISSION’S INTERNET SITE (HTTP://WWW.SEC.GOV).
SOME OF LINDBLAD’S FINANCIAL INFORMATION AND DATA CONTAINED HEREIN DOES NOT CONFORM TO SEC REGULATION S-X IN THAT IT INCLUDES
CERTAIN FINANCIAL INFORMATION (EBITDA) NOT DERIVED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(“GAAP”). ACCORDINGLY, SUCH INFORMATION AND DATA WILL BE ADJUSTED AND PRESENTED DIFFERENTLY IN CAPITOL’S PROXY STATEMENT TO SOLICIT
STOCKHOLDER APPROVAL OF THE PROPOSED TRANSACTION. CAPITOL AND LINDBLAD BELIEVE THAT THE PRESENTATION OF NON-GAAP MEASURES
PROVIDES INFORMATION THAT IS USEFUL TO INVESTORS AS IT INDICATES MORE CLEARLY THE ABILITY OF LINDBLAD TO MEET CAPITAL EXPENDITURES
AND WORKING CAPITAL REQUIREMENTS AND OTHERWISE MEET ITS OBLIGATIONS AS THEY BECOME DUE.
NEITHER CAPITOL NOR LINDBLAD UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY LAW. IMPORTANT FACTORS, AMONG OTHERS, THAT MAY AFFECT ACTUAL
RESULTS INCLUDE: BUSINESS CONDITIONS; WEATHER AND NATURAL DISASTERS; CHANGING INTERPRETATIONS OF GAAP; OUTCOMES OF GOVERNMENT
REVIEWS; INQUIRIES AND INVESTIGATIONS AND RELATED LITIGATION; CONTINUED COMPLIANCE WITH GOVERNMENT REGULATIONS; LEGISLATION OR
REGULATORY ENVIRONMENTS, REQUIREMENTS OR CHANGES ADVERSELY AFFECTING THE BUSINESS IN WHICH LINDBLAD IS ENGAGED; FLUCTUATIONS
IN CUSTOMER DEMAND; GENERAL ECONOMIC CONDITIONS; AND GEOPOLITICAL EVENTS AND REGULATORY CHANGES. OTHER FACTORS INCLUDE THE
POSSIBILITY THAT THE PROPOSED TRANSACTION DOES NOT CLOSE, INCLUDING DUE TO THE FAILURE TO RECEIVE REQUIRED SECURITY HOLDER
APPROVALS, OR THE FAILURE OF OTHER CLOSING CONDITIONS.
NEITHER CAPITOL NOR LINDBLAD MAKES ANY REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED
IN THIS PRESENTATION. THIS PRESENTATION IS NOT INTENDED TO BE ALL-INCLUSIVE OR TO CONTAIN ALL THE INFORMATION THAT A PERSON MAY DESIRE
IN CONSIDERING AN INVESTMENT IN CAPITOL AND IS NOT INTENDED TO FORM THE BASIS OF ANY INVESTMENT DECISION IN CAPITOL.
THIS PRESENTATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, NOR SHALL THERE BE
ANY SALE OF SECURITIES IN ANY JURISDICTIONS IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
TM
2
PRESENTERS
MARK D. EIN
Chairman & Chief Executive Officer
Capitol Acquisition Corp. II
SVEN-OLOF LINDBLAD
Founder, Chief Executive Officer & President
Lindblad Expeditions, Inc.
IAN ROGERS
Chief Financial Officer and
Chief Operating Officer
Lindblad Expeditions, Inc.
TM
3
AGENDA
1. Capitol Investment Thesis
2. Lindblad Expeditions Overview
3. Lindblad Market Opportunity & Growth Strategy
4. Business Combination
Appendix
TM
4
1. CAPITOL INVESTMENT THESIS
TM
5
INVESTMENT THESIS
● Premier Company in Industry – Lindblad is a global leader in expedition cruising and extraordinary travel experiences offering
captivating trips featuring highly curated content to 40+ remarkable destinations on all seven continents
● Compelling Market Opportunity – As individuals accumulate wealth and free time, they seek unique experiences which has led
the expedition sector to some of the highest growth rates in the travel industry
● Exclusive National Geographic Partnership – Long term strategic alliance featuring co-branding, co-selling and curated content
will be extended until December 31, 2025 in conjunction with this merger
● Extraordinary Operating Metrics – Lindblad enjoys industry leading Net Yields in excess of $950, 92% occupancy levels, and
consistently high guest satisfaction ratings. Long lead time on bookings creates outstanding revenue visibility
● Strong Financial Performance – 27% Adjusted EBITDA CAGR and 15% revenue CAGR from 2010-2014 and EBITDA is
projected to double again over the next five year period. Proven ability to add new capacity with high financial returns
● Platform for Significant Growth – Attractive future growth opportunities enabled by the merger include new ship builds,
expanded charters and potential acquisitions. Anticipate at least three new vessels to be built with proceeds from the transaction
● Visionary and Proven Management Team – Deeply experienced management team is led by Sven-Olof Lindblad who founded
the company nearly 40 years ago
● Attractive Valuation – Transaction values the company at a significant discount to comps, while Lindblad’s historical and
projected growth rates are meaningfully higher than industry averages
TM
6
2. LINDBLAD EXPEDITIONS OVERVIEW
TM
7
EXPLORE
THE WORLD AND ALL THAT’S IN IT—
AN UNPRECEDENTED MISSION
TM
Lindblad Expeditions and National
Geographic have joined forces to further
inspire the world through expedition
travel. Our collaboration in exploration,
research, technology and conservation
will provide extraordinary travel experiences and disseminate geographic
knowledge around the globe.
TM
8
HERITAGE
PIONEERING ADVENTURE SINCE 1958
“If Lars-Eric Lindblad had lived in the year 1000, he probably would have set foot on the North American
continent before Leif Ericson. Or, turning eastward, he might have reached China before Marco Polo.”
– ORNITHOLOGIST ROGER TORY PETERSON, PASSPORT TO ANYWHERE
LARS-ERIC LINDBLAD (1927-1994)
● For over 50 years, the Lindblad name has been synonymous with innovation and excellence in
expedition travel and eco-tourism
● A pioneer of expedition travel, Lars-Eric Lindblad began Lindblad Travel, predecessor to Lindblad
Expeditions, in 1958
● Led the first tourist expeditions to Antarctica and Galápagos in 1966-1969
HISTORY OF LINDBLAD EXPEDITIONS UNDER CURRENT PRESIDENT SVEN-OLOF LINDBLAD
Expands offerings to Canada,
Alaska, & Baja CA
1979
1997
1980-85
Sven-Olof Lindblad, founds
Special Expeditions (now
Lindblad Expeditions)
Acquires Orion
Expedition Cruises
Signs strategic alliance with
National Geographic
2008
2004
Begins to permanently
station ship in the
Galápagos
2015
2013
Forms Fund for Conservation
and Exploration in partnership
with National Geographic
Announces Merger with
Capitol Acquisition Corp. II
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9
DISCOVER
40+ REMARKABLE DESTINATIONS, ALL 7 CONTINENTS
ANTARCTICA
GALAPAGOS
ARCTIC
BAJA CALIFORNIA
ALASKA
EUROPE
PERU
PATAGONIA
AMAZON
VIETNAM & CAMBODIA
CENTRAL AMERICA
PACIFIC NORTHWEST
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10
EXPEDITIONS
EXTRAORDINARY PLACES, RENOWNED STAFF, INDELIBLE EXPERIENCES
● Destinations include the world’s most charismatic geographies
● World-class team of scientists, historians and naturalists
enlighten and educate guests
● Unique expedition photography program, National Geographic
photographers & certified photo instructors aboard
● Deeply researched itineraries promote in-depth, active
adventures and up-close encounters with wildlife, nature and
culture
● Ships specially equipped for personal forays via Zodiacs,
kayaks and hikes
CONSISTENTLY HIGH GUEST RATINGS
96%
95%
96%
93%
21%
22%
22%
23%
74%
74%
71%
73%
2012
2013
2014
2015 YTD
Excellent
Very Good
TM
11
MANAGEMENT
HIGHLY EXPERIENCED, TENURED TEAM
SVEN-OLOF LINDBLAD, FOUNDER AND PRESIDENT
● Founded Special Expeditions (now Lindblad Expeditions) in 1979
● Formed multi-faceted strategic alliance with National
Geographic that combines the strengths of two pioneers in
exploration and travel, with the goal of further inspiring the world
through expedition travel
● Founding member of Ocean Elders - a collection of fourteen
global leaders working to protect, value and celebrate the ocean
● Member of National Geographic’s International Council of Advisors
● Chairman of the Lindblad-National Geographic Fund for
Exploration and Conservation
● United Nations Environmental Program Global 500 Roll-of-Honor
TREY BYUS, CHIEF EXPEDITION OFFICER
● Joined Lindblad in 1993
● 20+ years of travel industry experience
IAN ROGERS, CHIEF FINANCIAL OFFICER
AND CHIEF OPERATING OFFICER
● Joined Lindblad in 2009
● 25+ years of hospitality and cruise experience
● Previously held senior finance roles within
several divisions of Carlson Companies,
Tauck World Discovery and Hyatt International
PETE MILLER, SENIOR VICE PRESIDENT,
FLEET OPERATIONS
● Previously spent 27 years in the U.S. Navy as
a nuclear submarine officer. Served in diverse
assignments at sea and ashore, and was the
Captain of the USS SPRINGFIELD (SSN-761)
for three years
● Oversees the marine operation of all of
Lindblad Expeditions’ ships
● Oversees all vessel programming, itinerary development, and
leads over 200 expedition staff including expedition leaders,
naturalists, photographers and undersea specialists
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12
NATIONAL GEOGRAPHIC
EXCLUSIVE STRATEGIC ALLIANCE
● Partnership established in 2004 based on a shared
heritage and passion for exploration
● Co-branding relationship includes all owned expedition ships
carrying the National Geographic name
● In conjunction with merger, partnership extended until
December 31, 2025 and National Geographic becomes
an equity partner through a 5% option
● Co-selling arrangement includes National Geographic sales
of Lindblad’s expeditions through National Geographic Travel
● National Geographic is exclusive to Lindblad for all
ocean-going, ship-based voyages
● Lindblad and National Geographic closely align marketing
efforts to promote expedition travel
● Expeditions feature National Geographic photographers,
writers, field researchers and film crews
“We are thrilled to extend our important partnership with Lindblad
Expeditions and support this transaction that will enable Lindblad
and our joint offerings to significantly grow in the future. The
relationship is based on shared core values which go to the
core of National Geographic's mission to promote the power of
exploration, science and storytelling to change the world.”
— GARY E. KNELL, PRESIDENT AND CEO, NATIONAL GEOGRAPHIC SOCIETY
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13
NATIONAL GEOGRAPHIC
REACHING 650+ MILLION PEOPLE WORLDWIDE EACH MONTH
Travel
~3.0 million brochures sent annually
Television
~400 million homes across 168 countries
Social Media
~117.1 million Facebook followers
~17.4 million Instagram followers
~13.0 million Twitter followers
~3.7 million YouTube subscribers
Website
~24 million monthly unique users
.COM
MAGAZINE
Print
~38 million English-language readers
TM
Source: National Geographic, Google Analytics, Facebook, Twitter, Instagram, and YouTube.
14
CURRENT FLEET
INTIMATELY-SCALED EXPEDITION SHIPS
OWNED FLEET
CHARTERED FLEET
NATIONAL GEOGRAPHIC EXPLORER
|
NATIONAL GEOGRAPHIC ENDEAVOUR
NATIONAL GEOGRAPHIC ISLANDER
|
81 CABINS, 148 GUESTS
|
56 CABINS, 95 GUESTS
24 CABINS, 47 GUESTS
NATIONAL GEOGRAPHIC ORION
|
NATIONAL GEOGRAPHIC SEA BIRD
NATIONAL GEOGRAPHIC SEA LION
53 CABINS, 102 GUESTS
|
|
SEA CLOUD
28 CABINS, 58 GUESTS
LORD OF THE GLENS
26 CABINS, 48 GUESTS
DELFIN II
14 CABINS, 28 GUESTS
JAHAN
24 CABINS, 48 GUESTS
31 CABINS, 62 GUESTS
31 CABINS, 62 GUESTS
TM
15
SHIP ROUTES
Svalbard
Greenland
Iceland
Canadian
Arctic
Alaska
National Geographic Explorer
National Geographic Orion
National Geographic Endeavour
National Geographic Islander
Pacific
Northwest
Europe
Baja
National Geographic Sea Bird
National Geographic Sea Lion
Galápagos
South
America
Antarctica
TM
16
ITINERARIES
UNFORGETTABLE JOURNEYS TO REMARKABLE DESTINATIONS
●Frameworks for genuine exploration;
with flexibility and spontaneity built-in
Journey to Antarctica: The White Continent
Galápagos
DAY 1: Fly from US to Buenos Aires, Argentina
DAY 1: Fly from U.S. to Guayaquil, Ecuador
DAY 2: Spend the remainder of the day &
overnight in Buenos Aires
DAY 2: Fly from Guayaquil to the
Galápagos, and embark ship.
DAY 3: Fly private charter to Ushuaia,
Argentina, embark ship
DAY 3-8: While exact routing is governed
by the National Park Service, we will
explore diverse islands, seeing a variety of
habitats and encounter Galápagos’ famous
endemic species
●Unique onboard tools: Zodiacs, kayaks, ROVs,
hydrophones, video microscopes & more
●Knowledgeable, engaging expedition staff
●National Geographic photographers/certified
photo instructors aboard
●Fine dining, amenities, wellness spa to make
exploring holistic
●Itineraries run from 5 to 24 days, with an
average of 9.6 days
●Trip prices range from $4,590 to $43,250 with
an average of $10,900
DAY 4: Transit the Drake Passage
DAY 5-10: Explore Antarctica
DAY 11-12: Sail to Ushuaia
DAY 9: Disembark ship; fly to Guayaquil to
overnight; explore the city at your leisure
DAY 13-14: Disembark Ushuaia, return charter
flight to Buenos Aires and U.S.
DAY 10: Fly to U.S.
TM
17
AWARD-WINNING
CONSISTENTLY INDUSTRY-HONORED
● Condé Nast Traveler’s 2014 Readers’ Poll –
Top 20 Small Cruise Ships in the World, 2014
● Travel + Leisure “World’s Best” Award for Small-Ship
Cruise Lines, 2013, 2012, 2011, 2010, 2009, 2008
● Condé Nast Traveler World Savers “Doing it All”
Award, 2013
● Travel + Leisure “World’s Best for Families” Award for
Small-Ship Cruise Lines, 2012, 2011, 2010, 2009
● Condé Nast Traveler Readers’ Choice Award –
Top 25 Cruise Lines, 2013
● Cruise Critic Editor’s Pick Awards “Best for Adventure,”
2013, 2012, 2011, 2010
● Condé Nast Traveler “Gold List”, 2013, 2009, 2008,
2007, 2006, 2005
● Climate Champion Award to Sven Lindblad by
Clean Air-Cool Planet, 2009
● Virtuoso “Sustainable Tourism Leadership - Supplier”
Award, 2013
● National Wildlife Federation Conservation
Achievement Award for Corporate Achievement, 2008
● Conservation Achievement Award for Corporate
Achievement from National Wildlife Federation, 2008
● Tourism for Tomorrow “Global Tourism Business
Award,” 2007
TM
18
STRONG REVENUE GROWTH
● Organic revenue growth has been driven by Lindblad’s increased marketing spend and ability to increase capacity and raise prices
without sacrificing high occupancy levels
● The acquisition of NG Orion in 2013 added significant additional inventory and revenue
REVENUE GROWTH COMPONENTS
($ in millions)
$200
$150
$150
$100
$100
$50
$0
$50
CAGR 2010-14
$198
$192
$200
$115
$100
$0
2010
$115
$100
2010
$134
$134
$116
2011
$116
2011
$154
$198
$192
14.7%
$154
$133
2012
$133
2012
$165
2013
$165
$171
2013
2014
$171
14.5%
2014
Net Revenue
Gross Revenue
Net Revenue
Gross Revenue
Key Metrics
Available Guest Nights
Occupancy %
Guests
Net Yield
145,408 154,158 154,804177,135179,566
89% 87% 92%92%93%
16,695 16,480 17,15719,32718,820
$685 $750 $861$931$953
TM
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SIGNIFICANT EBITDA GROWTH
● EBITDA margin has increased over 700 basis points from 15% to 22% over the past five years as Lindblad managed cost, added
capacity and increased scale
● The NG Orion was purchased in 2013 for $30 million and, following integration into Lindblad, now contributes approximately
$8 -9 million of annual EBITDA with significantly more anticipated in the years ahead
ADJUSTED EBITDA
($ in millions)
$50
$45
GR
27% CA
$25
$0
$27
$34
$36
$17
2010
2011
2012
2013
2014
Key Metrics
Margin
15% 20% 22%19% 22%
Maintenance Capex
$2 $5 $4$6 $6
Growth Capex
$0 $0
$0$30 $0
TM
20
3. MARKET OPPORTUNITY
& GROWTH STRATEGY
TM
21
MARKET OPPORTUNITY
GROWTH IN ADVENTURE TRAVEL(1)
($ in billions)
R
AG
%C
$263
65
increase in the appeal of
ü59%
adventure travel
increase in average spending
ü60%
per adventure trip
$89
in the average trip length
üIncrease
from 7 days to 9 days (2009 – 2012)
2009
2012
GROWTH IN SPECIALTY CRUISES (2)
($ in billions)
21%
GR
CA
$220
üTravelers seeking unique destinations
demand for premium
üIncreasing
priced travel
$85
experiences are
üDifferentiated
growing in popularity
2009
2014
TM
(1) Adventure Tourism Market Study conducted by George Washington University and the Adventure Travel Trade Association in August 2013.
(2) Cruise Lines International Association Cruise Industry Outlook for 2015.
22
UNIQUE POSITIONING
DIFFERENTIATED BUSINESS MODEL
TM
Expedition Adventure
Focus
ü
û
û
û
Attractive Target
Demographic
Affluent 50+
Mass Market
Mass Market
Mass Market
Industry-Leading
Net Yields (1)
$953
$168
$175
$192
New Vessel Cost
Coastal: Est. ~$40 - $45m
Blue Water: Est. ~$130 - $135m
~$700m
~$1,050m
~$1,000m
N/M
2.4x
4.7x
5.0x
Net Leverage
TM
Source: Company filings and AMEM Communication. CCL as of 2/28/15. Lindblad, RLL, and NCLH as of 12/31/14.
(1) (Revenues – Commissions – Onboard and Other Expenses) / Available Passenger Cruise Days.
23
ATTRACTIVE DEMOGRAPHICS
TARGET MARKET
PROJECTED U.S. POPULATION GROWTH BY AGE GROUP
Growth from 2014 to 2020
● Baby Boomers are an attractive, affluent
and growing segment that largely seek
life experiences over accumulating
material possessions
● Total over 75 million today
● Spend over $120 billion leisure
travel annually
● 45% expect to take an international
trip in 2015
Source: Travelmarketreport.com (December 2014)
25.0%
Lindblad guests
have an average
age of 57 and
84% are from
the U.S.
20.0%
22.0%
15.0%
10.0%
8.1%
4.0%
5.0%
0.7%
0.0%
Under 18
18 to 44
45 and Older
65 and older
Source: U.S. Census Bureau (March 2015).
TM
24
DIFFERENTIATED MARKETING
AND DISTRIBUTION MODEL
● Lindblad maximizes revenue and occupancy, while maintaining price integrity, with strategic marketing initiatives and
proactive trip and programming modifications as opposed to using promotional discounts
● Majority of annual marketing spend is direct mail to support the company’s direct distribution channel
● Additional marketing strategies include the use of traditional media, social media, brand websites and travel agencies
● Lindblad products are also marketed by National Geographic under the National Geographic Expeditions brand
● Lindblad uses its convening power on its ships to partner with some of the world’s most respected organizations
such as The Aspen Institute, TED and World Wildlife Fund to shine a spotlight on global environmental issues,
provide content for trips and increase the visibility of the company and its mission
● Strong guest and brand loyalty is evidenced by high levels of repeat guests and high guest satisfaction survey ratings
DISTRIBUTION CHANNELS(1)
Affinity and Charters
3%
National Geographic
20%
37% of guests
are repeat
customers
Direct
47%
Travel Agencies
30%
2014 REPEAT GUEST METRICS(2)
5 or More Trips
4th Trip 10%
4%
3rd Trip
8%
2nd Trip
15%
First Timers
63%
TM
(1) Based on guest ticket revenue net of commissions.
(2) Based on U.S. bookings.
25
4. BUSINESS COMBINATION
TM
26
TRANSACTION OVERVIEW
● Pro Forma Firm Value of $442 million
● Up to $110 million of cash projected to be available to fund expansion of fleet and other transaction expenses
● Lindblad will order two new coastal vessels shortly after closing for delivery in 2017 and 2018, and then opportunistically add
additional ships through new builds or acquisitions
● Prior to closing, Lindblad expected to borrow $120 million to refinance the Company’s debt and buy out certain existing stakeholders
● In connection with the transaction, the founders of Capitol will make a charitable contribution of $5 million to the Lindblad
Expeditions-National Geographic Joint Fund for Exploration and Conservation(1)
● Completion of the transaction is expected in May 2015
SOURCES & USES
($ in millions)
($ in millions)
IMPLIED FIRM VALUE
Shares Outstanding(2)
Share Price
Equity Value
Less: Cash(3)
Plus: Debt
Firm Value
Transaction Multiples
FV/ 2015E PF Adj. EBITDA ($45 million)
FV/ 2016E PF Adj. EBITDA ($51 million)
47.8
$10.00
$478
(156)
120
$442
9.9x
8.7x
Sources
Capitol Cash
Total Sources
Uses
Cash Consideration
New Ships, Working Capital & Transaction Expenses
Total Uses
$200
$200
$90
110
$200
POST-TRANSACTION OWNERSHIP
Sven-Olof
Lindblad 29% (4)
Capitol 50%
Other
Management 8%
Other Current Lindblad
Shareholders 12%
Lindblad-National
Geographic Fund 1%
(1) Contribution will be in the form of 500,000 shares of Capitol common stock.
(2) Fully diluted shares outstanding at $10.00 share price including all in the money management options. Excludes 1.25 million of Capitol founder’s
shares, which are held in escrow and vest at $13.00/share and 15.6 million warrants with a strike price of $11.50 per share.
(3) Includes incremental $5.5 million that would be received from the exercise of in the money management options.
(4) National Geographic has an option for a 5% stake from Sven-Olof Lindblad’s shares at $10.00 per share.
TM
27
ATTRACTIVE VALUATION
SIGNIFICANT DISCOUNT TO COMPS
STRONG FREE CASH FLOW YIELD
Firm Value / Adj. EBITDA (1)
15.0x
12.4x
9.9x
10.0x
10.0%
11.0x
2015E Adj. EBITDA - Maintenance Capex
8.4%
7.5%
8.7x
5.5%
5.0%
5.0x
2.5%
0.0%
0.0x
2015E
Lindblad
2016E
Comparable Company Median
WELL CAPITALIZED FOR EXPANSION
Net Debt / LTM Adj. EBITDA
6.0x
5.0x
Lindblad
Comparable Company
Median
ATTRACTIVE HISTORICAL & PROJECTED GROWTH RATES
30.0%
(3)
2010-14E Adj. EBITDA
CAGR
27%
2015E-20E Adj. EBITDA
CAGR
20.0%
4.7x
Lindblad
projected to
2x+ EBITDA
by 2020
4.0x
2.4x
2.0x
0.0x
(2)
10.0%
4%
N/M
Lindblad
NCLH
RCL
CCL
0.0%
Source: Company filings and Factset estimates.
Note: Comparable companies include CCL, RCL and NCLH. Projections based on Factset estimates.
(1) Lindblad 2016E Adjusted EBITDA excludes approximately $1.5 million of pre-marketing costs for a new vessel that is not yet delivered.
(2) Comparable company estimates based on company filings, company guidance and Factset estimates.
(3) Lindblad and RCL as of December 31, 2014. CCL is LTM as of February 28, 2015. RCL pro forma year end 2014 per company guidance.
Lindblad
Comparable
Company
Median
TM
28
SUMMARY PROJECTIONS
● With a new capital structure and greater financial flexibility following the merger with Capitol, Lindblad will be well
positioned to pursue significant opportunities to enhance and expand the business
● Core business plan is fully funded with significant additional capacity to pursue new opportunities
● Current excess demand is evidenced by the number of trips at or near full capacity (95% occupancy) growing from
49% in 2012 to 63% in 2014
REVENUE GROWTH
ADJUSTED EBITDA GROWTH
($ in millions)
($ in millions)
Current Revenue
Current Revenue
New Ship New
Revenue
Ship Revenue
$400
$300
$200
$400
$353
12%
$300
$204
$200
$217
$204
$318
R
CAG
$241
$217
$15
$264
$241
$40
$15
$264
$85
$40
$114
$85
$217
$204
$226
$217
$226
$224
$234
$224
$239
$234
$0
$0
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
New Ships Come Online
19,624
21,655
24,035
27,820
$114
$125
$100
$100
17%
$75
$204
$100
19,053
$353
$318
$100
Guests
Current Adjusted
Current EBITDA
Adjusted EBITDA
New Ship New
Adjusted
Ship EBITDA
Adjusted EBITDA
$125
29,527
GR
CA
$85
$97
$58
$51
$5
$66
$58
$15
$5
$66
$31
$42
$31
$42
$75
$15
$50
$45
$50
$51
$45
$25
$25
$45
$51
$45
$53
$51
$53
$52
$54
$52
$55
$54
$55
$0
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
Maint.
CAPEX
$8
$11
$8
$9
$16
$16
Growth
CAPEX
$12
$75
$67
$14
$49
$0
$239
2020
$97
$85
$0
TM
29
NEW VESSELS
GENERATE ATTRACTIVE RETURNS
● Shortly after closing, Lindblad plans to purchase two new coastal vessels
● A third blue water vessel is expected to be delivered in 2019
● Ships will be funded through a combination of cash raised in the merger and excess cash flow
COASTAL VESSEL 1 / COASTAL VESSEL 2
Delivery Timing
2017
2018
BLUE WATER VESSEL
2019
Cabins (est.)
50
85
Guests (est.)
100
170
$40 - $45 million
$130 - $135 million
~23%
~17%
Total Cost
ROIC(1)
TM
(1) Based on Lindblad management cost estimates and assumptions.
30
BOARD OF DIRECTORS
MARK D. EIN, CHAIRMAN
JOHN M. FAHEY, DIRECTOR
● Chairman and CEO of Capitol I and Capitol
Acquisition II
● Current Chairman (2011 - Present) and Former
Chief Executive Officer (1998 - 2013) of the National
Geographic Society
● Non executive Vice Chairman of Two Harbors
Investment Corp.
● Strong track record of value creation having
been involved in the early stages of six
companies that reached $1 billion valuation
● Serves on the board of directors of many civic,
philanthropic and charitable organizations
SVEN-OLOF LINDBLAD, DIRECTOR
● Founded Special Expeditions (Now Lindblad
Expeditions) in 1979
● Formed multi-faceted strategic alliance with
National Geographic
● Founding member of Ocean Elders- a collection
of fourteen global leaders working to protect,
value, and celebrate the ocean
● Previously Chairman, President and CEO of Time
Life Inc., a wholly owned subsidiary of Time Warner
Inc. (1989 -1996)
● Currently serves on the boards of Time Inc. (Lead
Director); Johnson Outdoors Inc.; and Great Plains
Investment LLC
● In February 2014, President Obama appointed
Fahey to a six-year term on the Smithsonian Board
of Regents, the governing body of the Smithsonian
Institution. Also serves on the board and executive
committee of the Smithsonian National Museum of
Natural History
L. DYSON DRYDEN, DIRECTOR
● Chief Financial Officer of Capitol Acquisition II
● Chairman of the Lindblad-National Geographic
Fund for Exploration and Conservation
● 15 years of investment banking experience. Most
recently, Managing Director in the Global Technology,
Media and Telecom investment banking group at Citi
● United Nations Environmental Program Global
500 Roll of Honor
● Prior to Citi, a Vice President for Jefferies and
Company, Inc.
TM
Note: A fifth board member will be named prior to closing.
31
CAPITOL ACQUISITION
TEAM AND TRACK RECORD
SUCCESS OF CAPITOL ACQUISITION I
On October 29, 2009, Capitol I, in partnership with Pine River Capital
Management, created Two Harbors Investment Corp. (NYSE: “TWO”)
one of the premier mortgage REITs, formed to capitalize on the severe
dislocation in the RMBS Market
ü 17.9% Annualized return over 5 years since closing
ü Market cap grew from $119m to $4.4bn (including spin-off) in only 5 years
ü Raised $3.3bn through 9 follow-on offerings and $321m from warrant exercise
off Silver Bay Realty Trust (NYSE: “SBY”), the first publicly traded
ü Spun
single-family housing REIT, with an additional market cap of $580 million
MARK D. EIN, CHAIRMAN & CEO
L. DYSON DRYDEN, CFO
● Founder and CEO of Capitol I
● Previously, Managing Director in the Global Technology,
Media and Telecom investment banking group at Citi
● Non-Executive Vice Chairman of Two Harbors
● Strong track record of value creation having been
involved in the early stages of six companies that
reached $1 billion valuation
● Prior to Citi, served as Vice President for Jefferies &
Company, Inc.
● Serves on the board of directors of many civic,
philanthropic and charitable organizations
TM
32
ANTICIPATED TRANSACTION TIMELINE
DATE
March 9/10
EVENT
● Business Combination Agreement Executed
● Transaction Announced
March 31
● Preliminary Proxy Materials Filed w / SEC
April 13
● Set Record Date for Shareholder Vote
May 4
● Print and Mail Final Proxy Materials to Shareholders
May 14
● Hold Shareholder Vote and Close Transaction
Denotes Historical Event
TM
33
APPENDIX
TM
34
LINDBLAD’S GUIDING PRINCIPLES
These guiding principles were
formed during a gathering of
more than 50 of our leaders,
naturalists, scientists, and
office staff. We arrived at
these principles collectively,
after spending a few days at
sea together immersed in the
expedition environment.
These principles guide our
conduct towards the guests we
serve and define the manner
in which we explore the world.
–Sven-Olof Lindblad
1. Ensure that everything adds value to the guest experience.
2. Integrity is our prime equity—never compromise it.
3. Positively impact the areas we explore and in which we work.
4. Treat everyone with dignity and respect.
5. Honor the value of service.
6.Maintain our expedition heritage by fostering a spirit of
exploration and discovery.
7. Demonstrate leadership; excel in knowledge; inspire others.
8. Innovate, test and evaluate. Be open to new ideas.
9. Strive for clarity in communication.
10. Maintain a balance between adventure and safety.
TM
35
ADJUSTED EBITDA RECONCILIATION
($
in millions)
Reconciliation of Adjusted EBITDA to Net Income
Year ended December 31,
2010
2011
2012
2013
2014
Net income
Income tax expense
Interest expense, net
Depreciation and amortization expense
EBITDA
$0.1 0.2
8.3
8.4
$17.0 $10.5
0.0
8.8
8.1
$27.5
$5.2
1.1 9.8 8.6 $24.7
$14.8 1.7
7.9
11.6
$36.0 $22.2
2.8
5.3
11.3
$41.6
Change in fair value of obligation to repurchase shares of Class A common stock
(Loss) gain on foreign currency translation
Earnings on investment in CFMF
Other income
Stock-based compensation
One-time acquisition-related expenses
One-time retention payments
Adjusted EBITDA
-
-
-
(0.2)
-
-
-
$16.9 -
-
-
(0.0)
-
-
-
$27.5 -
-
-
(0.0)
9.0 -
-
$33.6 0.4 (1.3)
-
(0.0)
-
1.3 -
$36.5 (0.0)
0.1
(0.1)
(0.0)
0.3
0.1
2.5
$44.6
TM
36
TM
37